Telecoms equipment maker Ericsson zoomed past market expectations with its second quarter profit today, reaping the benefits of rising demand and cost cuts, and raised its 2004 market outlook.
Ericsson, the world's biggest producer of mobile networks, made a 7.8 billion crown (€850 million) pretax profit in the April-June period, beating a consensus forecast of 5.5 billion.
Sales were 32.6 billion crowns against a consensus of 30.35 billion and up from 27.61 in the same period of last year. Orders exceeded sales, boding well for future sales growth.
Ericsson's gross margin, the broadest measure of how a company manages its costs in relation to sales, rose to 47.8 per cent from 44.7 per cent in the first quarter, against a market consensus of 44.8 per cent.
"Sales, order intake and gross margin were really good. The share was up in the US yesterday so I'd say Ericsson shares will rise 5-10 per cent," Redeye analyst Mr Urban Ekelund said.
Ericsson shares gained 7.6 per cent in pre-bourse Instinet trade at 21.2 crowns and were quoted at 21.5 crowns by the Swedish Fisher Partners brokerage earlier.
Since the start of the year Ericsson shares have soared 57 per cent, outperforming the DJ Stoxx technology index by 70 per cent. But some analysts have said the stock is fully valued and a strong report could be an opportunity to take profits.